(a) GENERAL RULE.In the case of the mines, wells, and other natural deposits listed in subsection (b), the allowance, for depletion under section 611 shall be the percentage, specified in subsection (b), of the gross income from the property excluding from such gross income an amount equal to any rents or royalties paid or incurred by the taxpayer in respect of the property. Hydrogen sulfide, alone, or in combination with natural gas is also unsuitable for use as a fuel because the combustion of hydrogen sulfide produces sulphur dioxide, a toxic substance subject to control under Federal pollution standards. In addition, natural gas contaminated by hydrogen sulfide cannot be burned or transported through pipelines because its corrosive nature would damage the combustion equipment and the pipelines. 312, 318 (1976)), the evidence in this case does not justify our ignoring the parties' stipulation. The gaseous hydrocarbons, or natural gases, exist in a gaseous state at ambient temperature and pressure and consist primarily of methane, ethane, propane, and butane. In this case, the district court determined that Texaco is liable to LL & E for paying royalties calculated upon the value of the gas as determined under the Section 105 contract price rather than the Section 109 ceiling price. In 1984, large additions and renovations were made to the lodge, increasing the size of the camp to accommodate more guests. Pierre-Franois-Xavier de Charlevoix, Dumont (as published See Rev. Moreover, respondent's reading of section 613A could discourage oil and gas production by independent producers and royalty owners, which would be contrary to congressional intent. Furnel, Inc. has been successfully implementing this policy through honesty, integrity, and continuous improvement. In 1935, after Texaco had been fully reimbursed, LL&E paid its first dividends. 1885). Caspary's charges had some legitimacy. Current estimates show that the unit has a sales volume of $1500000 and staff of approximately 17 people. At that time, the lodge housed the Louisiana Land and Exploration Companys crew while they constructed a levee around the 3,000 acre property. Co. Linder Oil Co. A Partnership P.C.S.I. Texaco pays 75 percent and gets 60 percent. Click on the case name to see the full text of the citing case. The taxpayer may elect to convert part of his oil quantity into a depletable natural gas quantity based on a conversion ratio of 6,000 cubic feet of gas to one barrel of oil. 95, respondent considered whether carbon dioxide extracted from a carbon dioxide well for injection into oil fields as a drive mechanism for the recovery of oil is eligible for depletion pursuant to section 613 or section 613A. Since that time, however, the amount of sulphur recovered from hydrogen sulfide has been greater. (Cf. Respondent raises a final argument for the first time on brief that sulphur derived from hydrogen sulfide cannot be depletable pursuant to section 613 because it is not possible to calculate "gross income from the property" with respect to the sulphur as section 613(c) requires. LL&E's company earnings, $54.9 million in 1990, fell to $20.9 million in 1991 as falling oil and natural gas prices combined to make the year a difficult one. The Louisiana Land and Exploration Company LLC operates as a subsidiary of ConocoPhillips. 82-17, 1982-1 C.B. Oil and Gas lease entities located at the same street address in New Orleans, Louisiana as Louisiana Land & Exploration Co.. Petitioners claimed percentage depletion on sulphur during the years in issue in the following amounts: Respondent issued his notices of deficiency and petitioners timely filed petitions on the following dates: If we find that petitioners' sulphur production is eligible for depletion under section 613(b), respondent concedes that petitioners are entitled to the percentage depletion deductions claimed. A number of members criticized the provision for unfairly singling out the oil and gas industry. LL&E enjoyed a good exploration year in 1990. Brine water, water with a high mineral content, is the nonhydrocarbon liquid extracted from the Jay Field wells. Petitioners contend that section 613A applies only to hydrocarbon fuels and that sulphur, which is not a hydrocarbon, is depletable under section 613(b)(1). On November 7, 1938, LL&E and Texaco amended their contract. area, Baton Rouge metropolitan 3rd Cir.1984), wherein the court approved the procedure of granting a partial summary judgment on the issue of an insurer's obligation to defend, reserving to the insured the right to establish damages in a further proceeding. [Emphasis supplied.]. Rec. (a) GENERAL RULE.Except as otherwise provided in this section, the allowance for depletion under section 611 with respect to any oil or gas well shall be computed without regard to section 613. Finally, respondent's interpretation of section 613A conflicts with normal usage of the term "natural gas" as meaning fuel. LL & E, which leases certain lands to Texaco for the production of gas, brought suit against Texaco claiming Texaco had failed to pay proper royalties under the leases. 1971). Although this Court will disregard a stipulation that is plainly contrary to the facts (Jasionowski v. Commissioner, 66 T.C. WebArising under the 2006 version of La. Rec. In 1975 the Kalua Koi Corporation, LL&E's 50-percent-owned Hawaiian operation, began construction on the first phase of a 298-unit hotel condominium complex. During the House debates, Representative Rhodes noted "that one of the reasons for this bill being brought here with some haste is the fact that we have a shortage of domestic petroleum." In 1960 Youngs signed a second contract with Texaco that subjected 275,625 additional acres to six years of exploration and development. Until 1982, the Frasch mining industry was the dominant source of sulphur in the world. fishing, particularly for shrimps and oysters; a major source of Sec. WebThe Louisiana Land and Exploration Company 909 Poydras Street P.O. The conversion ratio represents a fuel equivalence; 6,000 cubic feet of natural gas generates the same amount of heat as one barrel of oil. This definition encompasses both hydrocarbon and nonhydrocarbon gases. The Louisiana Land and Exploration Company LLC operates as a subsidiary of ConocoPhillips. Of the company's 225 million barrels of oil equivalent reserves, nearly 60 percent are garnered from domestic sources. State in S USA, When we have a project we'll go to Houston, rent a computer and run it through. Continuing to diversify, in 1968 Graham obtained the rights to participate in the resort development of approximately 50,000 acres on the western half of Molokai Island, Hawaii--an island previously best known for its leper colony. 94-36, 94th Cong., 1st Sess. A "warranty" contract is an arrangement whereby the producer is obligated to deliver to the purchaser certain quantities of gas; the source of the gas is unspecified and the producer may therefore fulfill his obligation from any source he chooses. Sec. Section 613(b)(1)(A) provides that sulphur is depletable at a 22-percent rate. For the purposes of this subsection, minerals (other than sodium chloride) extracted from brines pumped from a saline perennial lake within the United States shall not be considered minerals from an inexhaustible source. Instead, we find that the value of the gas within the terms of the leases is a disputed factual issue to be determined at the hearing on damages. Decisions will be entered under Rule 155. Respondent argues that hydrogen sulfide has no commercial value before it is converted into elemental sulphur and that it is not possible to compute gross income from sulphur at the well-mouth because sulphur has not been produced at that point. 6903 (1975) (statement of Senator Bentsen). Park, Poverty Point National Monument at Subparagraph (C), which states the oil and gas well exception from depletion, states simply "oil and gas wells." Raising this argument for the first time in his post-trial brief, respondent would argue a case that petitioners were unable to develop for trial and would, consequently, prejudice petitioners' case. The Supreme Court has interpreted "oil and gas wells" to mean the oil and gas produced from such wells. 979 (1961), affd. 121 Cong. While entities may have multiple locations, this is based on the address registered for the lease. Respondent thus concludes that we should not allow percentage depletion for sulphur derived from hydrogen sulfide. 4611 (1975) (remarks of Representative Green); 121 Cong. Section 613A seems also to use the term to mean a fuel, especially as applied in conjunction with Congress' goal of promoting domestic oil and gas production by subsidizing independent producers and royalty owners. tourism. 1763, then to the USA in 1783; W region acquired by the USA in the 123673km/47752sqmi. List of official symbols of Deteriorating economic conditions, windfall profits taxes, high dry hole costs, narrower profit margins, and declining demand all pressured earnings. Texaco's argument is based upon isolating the term "sold under" in subsection (a) of Section 105, rather than reading the Section as a whole to determine its meaning. And when we're finished we don't own the computer or have the people on our permanent payroll. Petitioner argues that the definition of "natural gas" in section 613A(e)(2) is intended only to distinguish between hydrocarbon natural gases and crude oil. This web site and associated pages are not associated with, endorsed by, or sponsored by The Louisiana Land And Exploration Company and has no official or unofficial affiliation with The Louisiana Land And Exploration Company. Company HistoryOil & Natural Gas Extraction. Costs were low at $3.23 per barrel and by year's end, LL&E's reserve life index stood at 8.4 years, nearly double that of 1980. The primary products from the Jay Field wells and processing facilities have been oil and natural gas. It appears that the absence of the phrase "minerals from" from paragraph (C) was not an oversight. Congress also was concerned, however, with the shortage of hydrocarbon fuels and the need to encourage domestic exploration for and exploitation of new sources of fuel. Section 613A(c) provides limited percentage depletion for independent producers and royalty owners based on a depletable oil quantity of 1,000 barrels per day. WebLL E is engaged primarily in exploration for and development of petroleum, natural gas and minerals. Hydrogen sulfide is never used as a fuel and is not sold under long-term fixed price contracts. Rec. The well effluent is initially treated in a separation system which uses gravity to separate the effluent into brine water, sour crude oil, and a sour gas stream containing natural gas, hydrogen sulfide, and carbon dioxide. The brine water is reinjected into the well. It replaced 203 percent of expended reserves, adding 55 million equivalent barrels of oil and natural gas, 46 percent of which came from the East Brae Field. Respondent's stipulation also suggests that the amount of the depletion deduction is susceptible of calculation. All Rights Reserved After processing, the crude oil is classified as sweet rather than sour oil. Commissioner v. Engle, 464 U.S. at 218. Louisiana. Phillips, meanwhile, continued to diversify. To make matters worse, copper revenues declined and precious metals margins shrank. See: In the Matter of Amoco Production Co., 78 IBLA 93 (1983) (A decision by the Interior Board of Land Appeals with appeal currently pending in the federal district court, western district of La., docket # CV84-0916); Letter opinion by Charles A. Moore, general counsel of Federal Energy Regulatory Commission, addressed to Tipperary Corp., 1982 Federal Program Advisory Service, p. 3, para. 613(A)(c)(4). Subsection (e)(2) defines "natural gas" as "any product (other than crude oil) of an oil or gas well if a deduction for depletion is allowable under section 611 with respect to such product." WebThe company's petroleum operations are conducted in the continental United States, the federal offshore area in the Gulf of Mexico, the North Sea, Colombia, and Indonesia. Cf. Louisiana. Field / Formation: LAKE DES ALLEMANDS / THE LA LAND & EXPLORATION CO U 004: Well Status: DRY AND PLUGGED: Well Type: Township Range Section: 13S 19E 022: Derrick Elevation: Members Only: Kelly Bushing Elevation: (b) PERCENTAGE DEPLETION RATES.The mines, wells, and other natural deposits, and the percentages, referred to in subsection (a) are as follows: (7) 14 PERCENTall other minerals * * * For purposes of this paragraph, the term "all other minerals" does not include. Canada by the British in the 18th-c); areas devastated by Hurricane Petitioners are calendar year, accrual method taxpayers. growth rate 2000?2005, Cane River National Heritage Area near Responding to these problems, Phillips curtailed and then suspended copper mining, reduced staff, eliminated high-risk exploration ventures, cut back on capital expenditures, and in November reduced the cash dividend. A 1915 hurricane destroyed many of the levees that Wisner had constructed. Steward announced that LL&E would sell nonstrategic oil and gas properties and use the proceeds to repay long-term debt and repurchase up to 10 percent of outstanding stock. As for the other genuine issues of fact which Texaco claims should prevent summary judgment herein, we find that they also relate solely to damages rather than to liability. At all relevant times, petitioner sold the sulphur it produced to Freeport Minerals Co. Listed below are the cases that are cited in this Featured Case. Leagle.com reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions. The practice in the oil and gas industry when section 613A was enacted was to sell hydrocarbon gas for use as fuel under long-term fixed price contracts. tax rate is 1 percent: a .97 percent Louisiana sales tax Of course, hydrogen sulfide is a gas naturally occurring in exhaustible deposits in the earth and falls within a technical classification of "natural gases." those by Henry WebLouisiana Land & Exploration Co/The - Company Profile and News - Bloomberg Markets Bloomberg Anywhere Remote Login Manage Products and Account Information Indices Outside of Louisiana, Youngs acquired mineral rights and royalty interests on 152,870 acres in Texas, New Mexico, North Dakota, South Dakota, Montana, Colorado, Florida, and Mississippi. Earnings recovered in 1989 as oil prices rose while replacement costs remained low. As if to bear out this description, LL&E's mining operation lost $7.8 million in 1977 and $6.6 million in 1978. 1965), cert. LL&E is a Maryland corporation having its principal office at New Orleans, Louisiana. Graham worked hard to keep expenses down. This criticism was borne out in December of that year when Lloxy paid $60 million for Gulf leases covering land under 300 feet of water.

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